Moleculin Updates Annamycin Progress and Full Pipeline Review

Moleculin Biotech, Inc, (NASDAQ: MBRX) is a preclinical stage pharmaceutical company focused on the development of anti-cancer drug candidates, some of which are based on discoveries made at MD Anderson Cancer Center.

Moleculin’s rapidly developing pipeline includes its lead drug candidate Annamycin, which targets relapsed or refractory acute myeloid leukemia (AML), as well as its extremely promising WP1066 and WP1122 portfolios of molecules.

Annamycin is extremely promising for AML patients who must first go through induction therapy in order to qualify for a life-saving bone marrow transplant. And because the drug may cater to a serious unmet medical need, the FDA may approve accelerated status. Early this year, Moleculin announced that its leading candidate, Annamycin, which is also known as the Liposomal Annamycin, has obtained an Orphan Drug Designation from FDA to be used for treating the acute myeloid leukemia conditions. This was a key milestone for the company that has a great goal of developing anti-cancer drugs.

ON August 9, 2017, the University of Texas System on behalf of the MD Anderson Cancer Center commented on several recent FDA approvals for new drugs for the treatment of acute myeloid leukemia (AML).

As per management, the recent approvals of three new drugs (Rydapt, Vyxeos and Idhifa) for the treatment of AML are exciting, since they provide additional options for treatments in defined subpopulations, and because they help underscore the magnitude of the potential opportunity for Annamycin, which the company will be studying for relapsed or refractory AML. With regard to AML, Rydapt is approved only for patients with a specific gene mutation, and for use in combination with the standard of care chemotherapy. Vyxeos is approved as an option to the standard of care, but only for specific AML patients, namely those with newly-diagnosed therapy-related acute myeloid leukemia (t-AML) or AML with myelodysplasia-related changes (AML-MRC).

Although FDA approval of both of those drugs was based on overall survival comparisons with a standard of care, Idhifa was approved based on an accelerated clinical trial design that showed a 19% response rate in patients with relapsed or refractory AML and IDH2 mutation. What’s interesting is that Idhifa was approved with a single Phase 1/2 clinical trial based on response rate, not overall survival, and a relatively low response rate at that. Also, the patient population for which it is approved represents only 13% of all AML patients. MBRX look forward to working with FDA on a similar approach for Annamycin – reliance on response rate in an accelerated path – but for a larger population of AML patients.”

Biotech stocks have had an impressive run so far in 2017. Headlines in the active biotech sector include significant progress made in clinical trials, R&D success and innovation as well as a favorable FDA policy environment as progress allows many industry players to grow and thrive in a rebounding sector. Considering abovementioned developments, the stock currently has an average rating of “BUY” and a consensus price target of $9.26, it implies an upside of 444.71%

About the Company: Moleculin Biotech, Inc. is a preclinical stage pharmaceutical company focused on the development of anti-cancer drug candidates, some of which are based on discoveries made at MD Anderson Cancer Center.

Company’s lead product candidate is Annamycin, an anthracycline being studied for the treatment of relapsed or refractory acute myeloid leukemia, more commonly referred to as AML. MBRX also have two preclinical small molecule portfolios, one of which is focused on the modulation of hard-to-target tumor cell signaling mechanisms and the recruitment of the patient’s own immune system. The other portfolio targets the metabolism of tumors.

Development Pipeline

Market Scenario:

With a roughly $1.85 billion market last year in North America, leukemia treatments are expected to hit upwards of $2.8 billion by 2021, translating into 8.9 percent CAGR. Globally, this should potentially become a $12 billion market by 2022. More specifically, the global AML segment of this market was recently forecast to hit $1.2 billion by the end of 2023, growing at a 5.3 percent CAGR, according to one study.

First Quarter 2017 Financial Results

Research and Development Expense: Research and development (R&D) expense was $0.5 million and $0.1 million for the three months ended June 30, 2017 and 2016, respectively.

The increase of approximately $0.4 million mainly represents an increase of approximately: $0.1 million related to an increase in R&D headcount and associated headcount costs, $0.1 million for sponsored research and related expenses; and, approximately $0.2 million associated with developing and testing drug product as the company prepare its IND for Annamycin and for the related clinical trials.

Net Loss: The net loss for the three months ended June 30, 2017 was $2.3 million which included non-cash income of $1.2 million related to a gain recognized on the expiration of warrants which was offset by a non-cash expense of approximately $3.3 million loss on the change in fair value of the Company’s warrant liability.

The net loss also included additional noncash charges for $0.1 million for stock based compensation and other stock based expenses.

As of June 30, 2017, MBRX had $9.3 million in cash and cash equivalents compared to $5.0 million at December 31, 2016.

As per management, existing cash and cash equivalents as of June 30, 2017 will be sufficient to fund its planned operations through the second quarter of 2018. Such plans are subject to change depending on clinical enrollment progress and use of drug product.

Key risk factors and potential stock drivers:

The company has not generated any revenues and no revenues are anticipated until it begins marketing the product. Accordingly, it must raise capital from sources other than the actual sale of the product to implement its ongoing and upcoming projects.

MBRX lack of operating history may make it difficult to raise capital. Any inability to timely borrow funds or raise equity capital to facilitate business plans may have an adverse effect on MBRX’s financial condition and future prospects.

The company’s business risk profile leverages on its innovative products and its potential in the rapidly growing market.

The company’s ability to ramp-up profitability while achieving meaningful revenue streams would be one of the key stock driver over the medium to longer term. The company must regulate its increasing development costs.

Stock Chart:

On Friday, August 11th, 2017, MBRX is trading at $2.71 (down -5.90%) on an above average volume of 2.85 million shares exchanging hands. Market capitalization is $48.12 million. The current RSI is 59.85

In the past 52 weeks, shares of MBRX have traded as low as $0.71 and as high as $6.84.

At $2.71, shares of MBRX are trading above its 50-day moving average (MA) at $1.75 and above its 200-day MA at $1.69

The present support and resistance levels for the stock are at $2.55 & $2.89 respectively.

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